What Investors Want to Know, Before They Invest

Get inside their heads, so you can better answer their questions!

If you're new to the funding game, you'll probably be curious about what investors actually look for in a company before they invest. Or if you've already had some investor meetings, maybe some of these things will ring true for you and bring you some additional insights? 

Key things to remember about your interactions with investors:

1. Investors are people, just like you (and not sharks, wolves, dragons or any other animal analogy we often give them), ie they want to be listened to, appreciated, look intelligent and be informed in the eyes of their peers.
2. They are VERY busy and usually see over 2000 pitches/startups a year, so they want you to be clear, concise and not waste their time - ie make sure they are the right fit for your funding opportunity.
3. They like to 'hunt' for the next big investment opportunity in packs and know each other very well - it's truly a small world
4. They like to learn about new industries, verticals, innovations, to help find the next 'Facebook' or 'Canva' to make them and their investors shine.
5. They think in patterns - when they invest in a success story, and see another founder that reminds them of that success story/themselves, they quickly connect the dots look for common indicators of future success.
6. They are prone to unconscious bias (especially towards women and minority founders), but so do we all, ie they can be influenced by some perceptions and not always the facts, just like you and me.
7. They generally want to help change the world, by investing in new solutions to important problems (and of course, make money on the way!).

So now that we've gotten all that out of the way, let's dive into the key information they need to know about you and your business, before deciding to go further.

WHO:

• Who are you (the founders) and who is on your team, Advisory board? Who has already invested in you? Investors need to know more about the profiles of the key team members, their experience and why they should trust and back you to build and grow your business
• Who do you serve? ie, which customer personas, categories are you trying to help with your product or solution.
• Who knows you? - who in their network already knows you? Which networks are you part of? What's your level of influence in the market?
• Who are your competitors? If you say you don't have any, they will simply not take you seriously. Even if you are a new product or market category maker, your customers are already solving the problem some other way, so identify your indirect competitors too.
• Who makes the key decisions in your company?

WHAT:

• What problem are your trying to solve? How big is it? (market size, TAM...)
• What type of company are you and do you want to become?
• What have you already tried and tested on your product or market-fit journey?
• What makes your product or service unique and defensible?
• What are the biggest risks and assumptions you have identified? What's your plan to mitigate them?
• What traction have you had so far? (revenue, customers, partnerships, press, innovation, etc.)
• What kind of an exit are you looking for?
• What are your financial projections for the next 3 years (beyond that is nonsense!) and what assumptions lie behind them?

WHY:

• Why did you start your company? What's your key motivation?
• Why are you the best person/team to lead this company?
• Why is your product/solution relevant now?
• Why are you looking for funding now?
• Why should they invest in you and your company now?

HOW:

• How are you solving your customers problem?
• How are you different from your competition?
• How do you run your company?
• How much money do you want to raise?
• How are you going to spend the money you raise? For what?
• How have you taken on board customer feedback and used it to fuel innovation and improve your product/service?
• How are you like to work with?
• How do you manage your team?
• How do you handle good and bad news? Stress? Conflict?
• How do you handle feedback? How 'coachable' are you?
• How resilient are you?

These are just some of the key things you can be sure that potential investors will want to know, before investing in you. You'll get asked these questions and more throughout the whole funding process, so best be prepared to answer them all. It's always good to get advice from other founders who've raised money before you and also to ask for straight answers from investors - are they going to invest Yes/NO?, are they really interested in your company.

Once you can cover all these questions, you'll be in a great place to have constructive conversations with potential investors and to tell your 'funding opportunity' story effectively. Above all, remember they are investing in your investment opportunity, not your product or service, so don't get too focused on your product demo or key features. Show them how you'll be a great fit for their fund, portfolio and try to get a straight answer Yes or No answer from them (to whether they will invest or not) as soon as you can. If it's a 'no', that's ok too, get it quickly and move on to the next investor on your targeted list!

Any other points you'd like to add to our list? Let us know in the comments below! 

Now, go get ready for your next investor meeting!